Despite Low Oil Prices – Economy is not in as Good a Shape as it Could be – Manmohan Singh

Despite Low Oil Prices – Economy is not in as Good a Shape as it Could be – The “bonanza” of low oil prices would not last but the Modi government had already spent two of its five years without giving people the feeling that the country was on an upward path.

Former Prime Minister Manmohan Singh has said the Bharatiya Janata Party (BJP)-led government at the Centre, despite the fortuitous circumstance of low crude oil prices, is letting slip a golden opportunity to get the country on an upward path of growth because of a failure to get its act together.

He spoke on an array of issues in an interview with Jyoti Malhotra of weekly newsmagazine India Today. He decried the state of the economy and said there was a crisis of confidence of the business community in the government. He also said successor Narendra Modi had failed to reach out to Opposition parties, and had an inconsistent foreign policy towards India’s immediate neighbours, particularly Pakistan.

The former PM said despite low oil prices, “the economy is not in as good a shape as it could be”. These low prices had helped the balance of payments, the current account deficit has come down and it had helped the government reduce the fiscal deficit. “In the hands of a purposeful government, this could be an opportunity to step up investment in the economy in a big way,” he said.

The “bonanza” of low oil prices would not last but the Modi government had already spent two of its five years without giving people the feeling that the country was on an upward path. “For example, the rate of growth of bank credit is much lower than would be the case if the economy was on an upward trend,” he said.

“The PM talks about ‘vikas’ (development) but in the growth rate, there is no significant difference from when we left power. In our last year, the rate was 6.9 per cent, while the latest figures today show it is 7-7.2 per cent,” said Singh, the PM from 2004 to 2014.

He said the government had also failed to persuade the business community to take advantage of the “fortuitous” circumstances to step up the rate of investment at home. This rate, he said, was only 32 per cent (of gross domestic product); at the peak of his government, it was 35 per cent.

Singh spoke of a lack of confidence within the business community. “When they talk to civil servants, they tell them they don’t know who the boss is….When we were in government, the business community talked a great deal about ‘tax terrorism’. I continue to hear the same talk when they come and talk to me,” he said.

Modi, he said, given his majority in the Lok Sabha, had unique opportunities and “in the hands of a purposeful government and wise leadership, there are enormous opportunities to make progress in the management of the economy and in containing social tensions”. Singh was also critical of Modi’s failure to reach out to opposition parties, including on the goods and services tax legislation. Finance Minister Arun Jaitley had called on Singh and Congress party head Sonia Gandhi to invite them for the marriage of his daughter. “But, that is not the way for the government to handle the relationship with the principal Opposition party.”

Singh, whose prime ministerial tenure saw several foreign policy successes, termed Modi’s foreign policy on Pakistan as inconsistent. He also felt that the government handled the Nepal situation poorly.